Terrorism Insurance: a Key Property and Business Consideration

May 2025 saw significant activity on the part of counter terrorism police in the UK, helping to highlight an increasing need for property owners and commercial businesses to consider purchasing terrorism and sabotage insurance. The classification of terrorist incidents is now very broad, compared to a few decades ago.  

What does terrorism insurance cover?

This is for two main reasons, both of which are covered by this type of insurance policy/extension to cover offered by Octo Insurance Brokers.  The first is the physical damage that can result from a terrorism attack. That could be caused by use of firearms, a vehicle, chemical substances, or something else.  With an ever-evolving terrorism threat, new ways of inflicting harm are materialising all the time.

The second reason for terrorism insurance is the loss of income that can result from an incident.  For a landlord or property owner, that would be rental income.  For a commercial business it would be the loss of income that results from running the business for a period of time – a typical business interruption scenario.

Is terrorism included on standard property and business interruption policies?

Many property owners and businesses wrongly assume that their existing property (buildings cover) and business interruption policies would cover these scenarios, if they fell victim to a terrorist attack.  The reality is that terrorism and sabotage are almost always excluded from standard property and business interruption policies.

And what do we mean by sabotage? That is defined as a subversive act, carried out for political, religious or ideological purposes, sometimes to try to influence a government’s decision-making or to instil fear at the heart of public life.

Current terrorism risk and the need for terrorism insurance 

In May 2025, there were five arrests under Section 5 of the Terrorism Act 2006, in Rochdale, Greater Manchester, London and Swindon.  Three right-wing terrorists also came under the spotlight for their intention to prepare acts of terror in West Yorkshire.  

Counter Terrorism Policing has also released figures for 2024, which showed a five-year high in the number of arrests for terrorism offences.  The total was 248 and the year ended with 257 people in custody for terrorism-connected offences.  In 2024, three late-stage attack plots were disrupted.

In total, the UK has seen 15 terrorist attacks since 2017 and 43 late-stage disruptions.  Also last year, the director general of MI5 said that state threat investigations had increased by 48% in the previous twelve months, with a particular threat detected from Iran-backed plots.

Martyn’s Law and its implications for commercial premises

Terrorism has also been in the news with the passing of Martyn’s Law in April 2025.  This requires commercial businesses, which have significant public footfall and accommodation, to identify potential threats and carry out risk assessments.  For those with capacities of more than 800, such as shopping centres, retail parks and venues, there is a need to consider CCTV, access control, physical barriers, exit strategies and much more.

Martyn’s Law (also known as the Terrorism Protection of Premises Act 2025) is not confined to those in city centres or areas of perceived high risk. Neither should terrorism cover needs be limited. Any location, at any time, can be subjected to an attack carried out through ideological, religious or political motivation and a desire to send a message and make a statement.  That could be done in any venue, outside any bar or restaurant, in any shopping complex, or in any street in any town.

Counter Terrorism Policing say they are “operating at a very high operational tempo” for good reason.  The threat is very real.

How terrorism insurance can protect a property or business

Responding to this, property owners and businesses should seriously consider purchasing terrorism and sabotage cover or adding it on to another policy that they have.  Physical damage from a terrorist attack could be significant and might entail having to rebuild from the ground up.  It might also mean demolition and rubble removal costs, all of which a terrorism policy would cover.

An attack could also damage stock and products, which would again need to be replaced.  Lost income could hit a business not just through downtime but because of a lack of access to a premises, following the creation of a police cordon.  However, it can also be due to public fear and a reticence to visit or be in a particular area in which an attack has taken place.  The impacts of loss of attraction can be significant, hitting gross profit hard.

If you are unable to trade, find it difficult to carry on operating as normal or suffer lost income because of a terror attack, a terrorism insurance policy can be a huge asset.  Just look back at the impacts on the Borough Market area, following the attacks that took place there in 2017, if you want evidence on the financial harm that loss of attraction can inflict.

Who needs terrorism insurance?

Whilst not many years ago, the decision-making process behind terrorism insurance purchase was probably that of asking yourself whether you operated in a busy urban environment, and close to any public building or privately run attraction that could possibly be considered a major target, that is no longer true.  Now, the question is that of whether or not you could survive the consequences of an attack on your property or business, wherever it is located and regardless of whether there is an obvious at-risk target nearby.

Dependent upon your terrorism insurance policy choice, you might also find that you have access to brand rehabilitation and crisis PR services, should the worst occur.  It may also be possible to purchase insurance that will compensate for the actions of an assailant who harms people that you employ or welcome into your business.

Talk to us at Octo Insurance Brokers today about the different terrorism insurance options available to you as a property or business owner and let’s close any gap in your protection that an act of terror could exploit.  Just call us on 020 4576 4092.

Author bio: This Octo insurance article has been produced by Richard Davis, a property insurance broking specialist with over 40 years’ experience in the Scottish insurance and UK insurance markets.